If you’re an Indian freelancer, consultant, agency, or SaaS founder working with international clients, you’ve likely run into one of these problems: clients hesitate to pay into your Indian account, billing in USD feels clunky, or your structure raises red flags. Even if PayPal or Stripe are technically available, having a US LLC makes everything smoother and more credible.
This guide explains why more Indian entrepreneurs are forming US companies, how the process works, what legal steps to consider under Indian law, and what happens after formation.
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Why Indian founders are choosing US LLCs
It’s common for Indian entrepreneurs to form a US company once their local structure starts limiting how they operate globally.
Clients abroad are more likely to trust a US-based entity. Payment processors like Stripe and PayPal become accessible. Billing in USD no longer feels like a workaround. And most importantly, it helps create a clear line between domestic and international operations.
For many founders, an LLC is the simplest and most practical option, especially for service-based businesses, freelancers, or early-stage SaaS.
But if you’re planning to raise investment, offer equity, or run an e-commerce business with inventory in the US, a C Corporation can often be the better choice.
Is it legal to form a US LLC from India?
Yes, but with a few important conditions. Under Indian law, setting up a business abroad is considered an Overseas Direct Investment (ODI) and is regulated by the Reserve Bank of India (RBI) under FEMA (Foreign Exchange Management Act).
To comply fully, you should route the initial investment through an Authorized Dealer (AD) bank, file Form FC before sending funds, and report your investment annually.
In practice, some Indian founders skip these steps when they don’t transfer money from India, for example, if they’re funding the company from a personal USD account or from funds already abroad. Still, it’s important to understand that non-reporting could create issues later, especially if you plan to repatriate profits, file your Indian return properly, or make future investments.
Even if you avoid ODI initially, your ownership in a foreign company may still require reporting, which is where many founders get tripped up.
Why does a US LLC make sense for Indian entrepreneurs?
Setting up a US LLC makes it much easier to work with global tools and clients. For starters, you can use Stripe, PayPal, Wise, and other platforms with fewer restrictions than you’d face with an Indian business setup. You’ll also be able to open a US business bank account, invoice clients in dollars, and use platforms that either require or strongly prefer a US-based entity.
More importantly, it sends the right signal. A US company with a clean setup, address, EIN, bank account, is often perceived as more credible than a freelancer invoice from a Gmail address with a personal PayPal link.
From a tax perspective, an LLC offers flexibility. If structured properly and with no US source income, you may not owe US taxes, though you will still need to file. And as an Indian tax resident, you’ll still be taxed on your global income in India, but with a better structure and clearer compliance.
Step-by-step: How to set up a US LLC from India
The process can be completed remotely and doesn’t require you to be in the US, especially when you’re working with a team that understands the full formation workflow from state filings to IRS approvals.
Here’s what that process usually looks like from start to finish:
- Choose your state: Wyoming and Delaware are the most common options.
- Register the company and get a US address and registered agent.
- Apply for an EIN (Employer Identification Number) from the IRS.
- Open a US business bank account with fintech providers like Mercury or Relay.
- Set up Stripe, PayPal, or other payment platforms using your LLC.
The entire setup can take anywhere from 3 to 8 weeks, depending on how quickly documents are processed.
We manage all of this in one place, and more importantly, we stick around after your company is formed, helping with tax filings, bookkeeping, and anything else that comes next.
What Indian founders often miss after forming a US LLC
Registering the LLC is just one step. What matters just as much, and often gets overlooked, is what comes next: ongoing compliance, tax obligations, and reporting requirements.
Many founders only discover these requirements after setting up the company, especially when they try to repatriate profits or file taxes in India. At that point, they are often chasing deadlines or trying to fix avoidable mistakes.
In the United States, you must file tax forms every year, even if your LLC had no income or activity. If you are the sole owner and not a US resident, you will need to file Form 5472 along with a pro forma 1120. Skipping this can result in a $25,000 penalty.
On the Indian side, you need to disclose the existence of your foreign company in Schedule FA of your income tax return and report any foreign bank accounts. If your total foreign assets exceed ₹50 lakh, additional reporting rules may apply under the Black Money Act. You may also need to file Form 67 to claim any foreign tax credits, if applicable.
Transferring money from a US LLC to India
Most Indian founders repatriate profits through a Non-Resident External (NRE) account or a Non-Resident Ordinary (NRO) account. The choice depends on your residency status and how the funds are treated under Indian tax rules. NRE accounts allow full repatriation and are tax-free in India, while NRO accounts are subject to repatriation limits and taxation.
Before transferring money from your US LLC to India, it is important to make sure your compliance is in order on both sides. This includes keeping your US filings up to date, preparing proper documentation, and understanding how the transfer will be treated under Indian tax law.
In most cases, repatriating funds requires routing the transfer through an Authorized Dealer (AD) bank under the Liberalised Remittance Scheme (LRS). If you don’t do this correctly, or if you skip required disclosures in India such as reporting foreign bank accounts, it may trigger scrutiny or penalties later.
A common mistake is transferring business income directly into a personal account without supporting records. This not only creates compliance risks but also defeats the purpose of having a separate business structure.
It is always better to plan the entire repatriation process in advance, ideally before the LLC is formed.
What about double taxation?
This is one of the most common concerns. The good news is that the US and India have a tax treaty that prevents most forms of double taxation. If your US LLC earns income that’s not considered “effectively connected” to US business activities, it may not be taxable in the US.
That said, you will still need to file. And as an Indian resident, you must report your global income, including profits from your US LLC, in India. You may be able to claim foreign tax credits if applicable.
So while you might not pay twice, you do need to comply on both sides.
Want to understand how a US LLC or C Corporation could work for your business, and how it affects your US tax obligations?
Book a consultation with our US tax specialists and get clear, practical answers based on your situation.
Common mistakes Indian founders make with US LLCs
Some founders open a US LLC and immediately start using Stripe and receiving payments, but fail to file any US forms. Others forget to report their foreign company in their Indian tax return, which can trigger scrutiny later on.
Another common mistake is thinking that the LLC is completely “tax-free.” Even if you owe no tax in the US, the requirement to file remains. And if your LLC becomes active in the US, for example, by hiring a US employee, opening an office, or selling physical goods from a US warehouse, you might trigger Effectively Connected Income (ECI) and owe US tax.
Some founders choose the cheapest formation provider they can find, only to realize later that it didn’t include tax support, banking help, or proper compliance guidance. If you’re building a business for the long run, it’s worth getting it right the first time.
And finally, some founders route business income through personal accounts, which not only creates a compliance mess but also undermines the whole point of having a separate business structure.
What support you might need after forming
After the LLC is formed, your real journey begins. You’ll likely need:
- US annual filing support (Form 5472, 1120, etc.)
- Indian tax guidance (Schedule FA, ITR-2 or ITR-3, Black Money Act compliance)
- Bookkeeping that spans USD and INR transactions
- Help with remittances, distributions, and international invoicing
- A clear understanding of how to scale compliantly
The founders who do best are the ones who take compliance seriously from the start, not just formation.
We handle everything on the US side, from formation to compliance, and we always recommend speaking with a local advisor in India about FEMA, ODI, and tax reporting requirements. If needed, we can help connect you with trusted professionals to ensure your setup is clean on both sides.
Quick answers: US LLCs for Indian founders
Can I open a US LLC while living in India?
Yes, you can. There’s no US residency requirement to form or own a US LLC.
Do I need a US address to open an LLC if I live in India?
You don’t need a physical address in the US or any connection to incorporate a US LLC, we can help you with a virtual address.
Do I need RBI permission to form a US company?
You don’t need “permission,” but you do need to follow FEMA’s ODI rules, including Form FC and routing funds through an AD bank if you’re investing money from India.
Can I skip ODI if I’m not remitting money from India?
Not exactly. You might avoid filing Form FC if no capital leaves India, but you still have reporting obligations, especially as an owner of a foreign entity.
What forms do I need to file in India after forming US LLC?
At minimum: Schedule FA in your income tax return. You may also need to file Form 67 for tax credits, and disclose foreign bank accounts.
Is a US LLC the right move for global entrepreneurs from India?
A US LLC can help you go global faster, with better payment options, more credibility, and fewer operational headaches. But it’s not a shortcut around taxes or compliance. You’ll need to understand both US and Indian regulations, and build a setup that works on both sides.
If you’re serious about growing your business internationally, and you want to do it the right way, forming a US LLC could be the next step.
And forming your US company is just the beginning.
We don’t just form your LLC (or C Corporation). The Entity Inc. team helps you handle what comes next, including EIN, banking, tax filings, and ongoing compliance, all in one place.
We understand the practical realities Indian founders face when building globally, and we’re here to support that journey with clarity and structure.
Launch your US company from home. No paperwork headaches.
We’ll handle it all for you.
